The End of Big Beer. What now?

Craft brand, Brooklyn Brewery, the fastest US growing company is founded by Middle East correspondent and sold a stake to Japan’s second-giant brewer Kirin. Local top 50 ranked micro brewery, Breckenridge Brewery was scooped up by major brewer AB InBev as one of many acquisitions. We’re living through an era of remarkable consolidation times where big brewers have a lot of power. Just think about what kind of beer you have had in the last few days. I question how long this power is going too last?

There is a larger trend here. From banking to transport to beer, acquisitions are accumulating at a breathtaking place. This trend is spreading. And by the time it’s through, each category is shaken up. Yet at the same time, the largest companies see their market share shrink. The merger between AB Inbev and Sabmiller happened in the same decade that we’re seeing the rise of an explosion of craft breweries around the world. There is a new generation of brewing companies who are doing extraordinary things. Recent stats from the Brewers association (November 2016) back that there are 4.269 breweries, which is record high since 1873.

Nicco Mele (HBR Blogs) believes that industry consolidation may be the death of mature industries, especially the beer market as they seem to struggle with the return to a more entrepreneurial craft economy. I agree as

I see craft goes not away. It’s not a passing fad. Craft breweries build a strong brand and are smarter about their business. The movement is happening all over the world. Craft is such a hot ticket, which is a sign of scale. Being a conglomerate and having money isn’t a competitive advantage anymore.

Why? Because convenience, accessibility and speed changes everything. Today major brewers feel an intense pressure to innovate within their massive portfolio as faster growing micro brewers take market share. The major breweries are built on a classic model. Business influencers Clay Christensen and Max Wessel, penned a piece that they called “The Capitalist’s Dilemma.” The system that brewers use is focused as capital is scarce and thus must be used as efficiently as possible. It’s focused solely to burn a pile of cash by buying craft brands. And when they can’t make their desired margins and deliver craft beer to consumers, they merge and acquire each other to keep margins steady and slowly explore ways to make craft beer at better margins.

It seems odd, but the big players seems to follow the footsteps that led to irrelevance of a bunch of other once-dominant companies, such as Eastman Kodak, Woolworth’s department stores and Blockbuster video.

So what makes today’s business thrive? I see two trends happening in the beer space.

1. Consumers have more choice

The ethos of today’s craft beer is still booming. Every day, two new breweries are opening up and there still room for growth, particularly at a local level. People are gravitating away from big beer brands to national craft beer brands and toward regional and local brews. Even large groups of wine and spirit consumers that didn’t consider themselves beer drinkers are now drawn to craft beer by the quality and diversity of flavors.

There is an increase in a number of breweries that are exposing new beer lovers to craft, opening new markets and creating opportunities for the entire category. As they continue to grow, so will the availability of innovative and high quality beers produced for all to enjoy. They hack together new creations and are obsessed with fresh quality beer. They have an open culture and people matter for them more rather than profit. Craft beer brand, Brewdog is great example of this. Still independent and would never sell their soul to a big beer brand (I hope). This attracts more beer lovers who appreciate these simple values. They are driven by focus on central tenets of the “food movement”: artisanship and locality.

This movement is unfolded as Dr Mark Meckler (Feb 2016) mention that craft beer entrepreneurs accept less efficiency, more happiness and the public is willing to pay a higher price for a pint or a six pack beer. For me craft brewers are my friends, hard working people, and making a living by providing value and stand for something wonderful that has been missing from our community so long.

These players may start small like the early pioneers, such as Anchor Brewing in the sixties, but they can get bigger and turn into small and independent craft brewers. For example, such as Stone Brewing, Dogfish Oedipus, Rogue Ales Brewery of today and ultimately dominate the market, such as Brewdog.

2. The maker culture returns

The irony is that the craft beer revolution began in the garages of home brewers who were dissatisfied with what ‘beer’ meant to them. But, these early adopters don’t represent the mass market. They are willing to invest years of time, energy, expenses, and creativity because they are artists.

Average set up for a passionate home brewer

Production capability become more accessible and portable. And the acceleration of that trend (driven by Moore’s Law) means that every single day it gets easier for someone else to make your product and to do it better, faster, and cheaper. Due to the constant expansion of what you’re able to invent in your garage, tomorrow there is always a more advantageous starting point existing. Now, you only need a brewing machine, a dream and a retail location to start your brewery.

The transition to the mass market is to remove the barriers to brewing excellence so anyone can easily start home brewing, feel connected, and enjoy the artistry of craft beer without the upfront education and infrastructure costs. Plus, who has time to spend six to eight hours brewing beer.

At MiniBrew, we spend our hours helping beer drinking humanity embrace this reality by disrupting the beer space by letting people be a part of the local beer renaissance. We’ve found that this new wave allows anyone to brew beer without being dependent from the big beer brands. This wave can be nested in 3 domains:

#1 Anyone can be their own brewmaster

In short, it’s all about local craft beer. It’s not just your town, but your block. The eat local approach has proved particularly relevant to beer. Locally is an important factor. The next step is about starting to put your creative juice towards making your own local craft beer. Today’s market is getting ready for home brewing — as shown people want to make what they love. Such as sour beers. Beers with complex flavours. Beer brewed differently — taking note of a shifting taste. I believe that many people can discover and make their own beers. As today, you can learn to brew beer by the push of a single button vs years of constantly learning. At MiniBrew we shorten the curve of a brew day — from a weekend and months to ferment to a few hours and days. Even better, and by letting the ingredients delivered to your home so you could make it fresh yourself.

My theory is that we are in the middle of technology shift in which people are having the power to take over large swatches of existing economies. With lower startup cost and vastly expanded home brewing domain, the result is a global economy that for the first time is opening up — the dream of every artisan. More and more people are exploring home brewing.

#2 A platform to create and experiment with flavors.

Today, the most ideal scenario is a platform that moves beyond the brewery itself to encourage others to brew, even play and iterate on existing breweries recipes. The value of this type of platform is discovery not only by the breweries, but by the people. Putting it simply, a platform can be the engine that outsources the costly process of brewing and uncertainty.

Perhaps the single most influence example of this phenomenon is removing borders that exist in the beer space — as what us is holding back from drinking beers that are brewed in Japan, but never shipped to Europe. This platform is about making any recipe globally available. No physical stores are necessary. The trend towards brewing locally will only accelerate and be completed controlled by the people. And this is already happening as the joy of discussing beer and its unique qualities, flavors, and characteristics doesn’t end when you leave the brewery.

The cost of setting up a brewery was approximately $150.000 a year. Running the gig today, brewing your own beer cost about $1.000 a year. Over the next 5 years, I expect people are self-sufficient and able to source locally what they want, whenever they want and to drink it. Just like the food-movement did 10 years ago. And while you experiment and improve, you can share your new recipes with the world. Your skill and happiness of being an artisan brewer will go beyond your kitchen and influence the world.

#3 Brewing is the end game

The large giant brewers chase margins at the expense of future customers. That’s why this huge but latent demand for home brewing technology has gone unmet for so long. Today, nothing is smaller, more local, or more special than beer brewed at home. The real magic of democratising the beer space is when these domains interact which each other. New people may reinvent old styles and institutes in brewing spread by new ones. The point is, that the beer category will change and constantly evolve to stay ahead of itself.

This will end the global mega beer corporations, which destroyed, bastardised and commoditised beer by acquiring craft breweries from left and right. I think we’re heading — if we’re lucky — from a world of a number with a few big brands to a world of small and many ones. A world where people decide what they want to brew and drink. This is a huge opportunity. I know home brewing will be a hit. Let’s embrace together.


If you like the article, please hit the heart here below. Namaste :)